The Canadian Securities Administrators today published for comment revised proposals to tailor and streamline the governance and disclosure requirements applying to venture issuers. As we discussed last year, the CSA originally published regulatory proposals concerning venture issuers in July 2011. According to the CSA, the version released today has been revised to take into account comments received from stakeholders in response to the earlier proposals.
As with the version released last year, today's proposal would see the adoption of National Instrument 51-103 Ongoing Governance and Disclosure Requirements for Venture Issuers to replace, for venture issuers only, the continuous disclosure, governance and other obligations currently found in various other national instruments.
Among other things, the proposals would (i) consolidate the required disclosure for a venture issuer's governance practices, audited annual financial statements, associated MD&A and CEO/CFO certifications into an annual report; (ii) replace the interim MD&A requirements with a requirement for a short discussion of the venture issuer's operations and liquidity to accompany the 3, 6 and 9 month interim financial reports; (iii) replace the requirement for business acquisition reports in connection with acquisitions of significant businesses with enhanced continuous disclosure reporting; (iv) introduce substantive corporate governance requirements relating to conflicts of interest, related party transactions and insider trading; (v) tailor and streamlining director and executive compensation disclosure; and (vi) allow for the delivery of disclosure documents, such as annual reports and interim reports on request in lieu of mandatory mailing.
Meanwhile, prospectus requirements applicable to venture issuers would also be relaxed to, among other things, require that only two years of audited financial statements be included in a long form prospectus instead of three, and permit a venture issuer to incorporate by reference the continuous disclosure documents prepared under the national instrument when preparing a short form prospectus, qualifying issuer offering memorandum or a TSX-V short form offering document.
According to the CSA, the new instrument would improve investors' access to key information by tailoring disclosure requirements for venture issuers, eliminating certain disclosure obligations that may be of less value and requiring supplemental disclosure relevant to venture issuer investors. The CSA is accepting comments on the revised proposals until December 12, 2012.